How much notice is needed to claim Force Majeure?

The information provided in this video does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information in this video may not constitute the most up-to-date legal or other information. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.

Introduction:

In our recent webinar, Sean Whalin (Co-founder and CEO of HopSkip) sits down with legal experts Barbara Dunn (Partner at Barnes & Thornburg LLP representing groups) and Lisa Sommer Devlin (Devlin Law Firm, P.C. representing hotels) to discuss the age-old "10-day advisory period" in Force Majeure and share tips for a more dynamic and communicative approach for better contract management.

TL;DR:

Is Timing Flexible in Hotel Force Majeure Clauses??

• The "10-day advisory period" in Force Majeure clauses is more of a convention than a legal requirement.
• Flexibility and open communication are key; one size does not fit all when it comes to Force Majeure.
• Clauses are getting tighter due to abuse, making realistic communication essential for both parties.
  
  

This conversation was recorded during HopSkip's recent webinar "Navigating Meetings & Events in Q3"

I've heard of a 10-day advisory period when it comes to using Force Majeure.....is timing flexible when it comes to Force Majeure in my event contracts? 

Video Transcript:

0:20 | Lisa Sommer Devlin

The ten-day advisory period is one of those things nobody knows where it came from; it's just been there forever. And I will tell you that I never included it because I don't think there is any particular day. 

Every force majeure can be a moving target. If we learn nothing during the pandemic, we learn that what may be happening today isn't necessarily happening six months from now.

And so a ten-day advisory or ten-day notice period isn't helpful for anybody. And in any force majeure, the important thing is communication because I have clients on Maui; people were calling and saying, well, we're not supposed to come to Maui, or can we come to Maui?

Well, it depended on where the hotel was in Maui. And while initially, while they were trying to evacuate everybody, they wanted to avoid new tourists coming in.

But within two or three days, the state begged people to return to Maui because their economy is so dependent. And so that's dependent on tourism. And so that's why I don't have a ten-day notice period. 

I want the parties to communicate and say, what do you think when they think something is happening? Let's wait ten days and see how it's looking in ten days.

Or let's wait a month, depending on what it is, and see how it's looking then, rather than having some locked-in period that may make people make decisions that could be better for both sides.

1:47 | Barbara Dunn

I 100% agree with you, Lisa. When I saw the question, I said what ten-day advisory period? But I see it, of course, like you in the contracts. I don't put it in there because we need flexibility. As you point out, the main issue is whether the clause is triggered. So, as you all know, the first part of the clause will be that grocery list.  

Certainly, the tragedy that happened in Maui was something that would otherwise be covered on that grocery list, if you will, of bad things. I say that and pause simultaneously because many of you are accustomed to this going back to my be careful category.

Many of you are accustomed to a forced measure clause to see, including, but not limited to, the so-called catch-all statement at the beginning or end of that list and any other cause beyond the party's control.

2:38 | Barbara Dunn

Many clauses are out there now that do not have a catch-all statement. It will say any of the following events, list five things, and that's it. So, if what happened in Maui wasn't one of those five things, it's not just a cautionary tale.

Then, of course, it's that standard of impact. I know there's discussion in the chat about that standard of impossibility being no way, no how.

Obviously, tragedy to the extent that your meeting might have been at a hotel or that would have been affected by what happened in Maui. Absent that, you get into situations like Lisa described, where it isn't impossible, but the lights are on at those hotels. 

Getting there might be harder, more expensive, et cetera. So that's the key point in the clause.

3:30 | Barbara Dunn

But moving away from the ten days, I think that's just not reasonable because many of these force matures, just develop. And, of course, I absolutely agree with the communication piece. That's important.  

03:44 | Lisa Sommer Devlin

The challenge with the force majeure clauses is not real force majeure. The hotel side's problem is when customers claim force majeure when the hotel believes the event could go forward.

Someone mentioned in the webinar chat, "The city is fine, but it's become an island, and you would have to put everyone in helicopters and boats to get there". 

Okay, yes, maybe the hotel is open at that point, but maybe getting the people there is not feasible to get the attendees there. That's why those conversations need to take place and say, what can we do? Can we overcome whatever this challenge is? Or is it just unreasonable, and you cancel? 

That's why the clauses are getting tighter because hotels have experienced so many situations in which customers used it to get out of a contract they didn't like that the hotel disagreed with.  But there should always be that communication, and it should be realistic about whether or not you can actually go forward.

04:41 | Barbara Dunn

Lisa, just one quick note because we've got a good comment in the chat about the frustration of purpose language in some contracts and specific language regarding COVID or the like, and having extra options, if you will, or extra steps, and kind of what our thoughts are on it.

From my standpoint, COVID or any other, gosh forbid, a similar circumstance will fall on the grocery list, and we have to go through the same analysis we've discussed.

I've experienced that this language often puts in extra steps, extra requirements to trigger the clause, or extra requirements to rebook a meeting. Of course, the latter are things that the group and hotels will talk about, if of course. But I'm not a fan of most of those clauses.

Of course, it will all depend on what the language says. But that said, I don't see a need to call it out separately. I understand why it's being offered up, but from the group's perspective, it typically adds more hurdles than the clause itself.

Conclusion:

To summarize, utilizing Force Majeure clauses necessitates a thoughtful and comprehensive approach that extends beyond mere compliance. The conversation between Lisa and Barbara emphasizes the significance of adaptability and effective communication during contract negotiations.

While inflexible timelines such as the "10-day advisory period" can be more constraining than beneficial, engaging in open dialogue can pave the way for more advantageous and equitable agreements.

Achieving a harmonious balance is key, and utilizing tools like HopSkip can certainly assist in maintaining this equilibrium, ensuring that both parties reach a contractual agreement that best serves their interests.

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The information provided in this video does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information in this video may not constitute the most up-to-date legal or other information. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.